But Downer said there were no plans for Prime Minister John Howard and Indonesia's President-elect Susilo Bambang Yudhoyono to discuss a new treaty when Howard visits Jakarta for the former

general's inauguration on Wednesday.

"I'm making it clear that it's something that we would be prepared to have a look at," Downer told Australian radio.

"Perhaps we'd look at the police co-operation between us and other areas where we could could enhance co-operation between Australia and Indonesia and make it something of substance."

Australia and Indonesian police have worked closely since the 2002 Bali nightclub bombings that killed 202 people, including 88 Australians, and again since a car bomb exploded outside Australia's Jakarta embassy last month, killing nine Indonesians.

A security deal between Australia and Indonesia signed in 1995 committed the countries to ministerial consultations about security, increasing cooperation and consultations in the event of a threat to either country or to regional security.

But the deal collapsed in 1999 after Indonesia, the world's most populous Muslim country, objected to Australia leading a UN peacekeeping force into East Timor to quell an outbreak of violence after it voted for independence from Indonesia.

More than 1,000 people were killed in fighting, with most deaths blamed on pro-Jakarta militias backed by elements of the Indonesian military.

Downer said there were likely to be some Indonesians opposed to a new security pact with Australia because they did not want a foreign policy too closely associated with the west.

"I always say to the Indonesians: 'Well, you don't want to look at it terms of east and west or north and south but want to think of it in terms of neighbourhood relations'. We're Indonesia's next-door neighbour," Downer said.

"It's very important to both of us that we have a good working relationship as best we can despite the differences that exist between us and it's possible that some arrangements along these lines could be helpful in enhancing that relationship."

Howard and Yudhoyono hope to hold general bilateral talks next month during an Asia Pacific Economic Cooperation forum summit in Chile.